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Making Military Families Pay

While Obama's union allies are spared health care budget cuts.

The specter of the 2010 Patient Protection and Affordable Care Act, aka Obamacare, now hangs over America's fighting forces. Included in President Obama's proposed cuts in defense spending is a call for military families and retirees to pay more for their health insurance, even as unionized civilian defense workers' benefits remain off limits to those same increases. According to U.S. officials, the proposal is reportedly creating a "major rift" within the Pentagon. Why the change? Several congressional aides contend the move is designed to move more soldiers into the state-run health exchanges created by the healthcare bill.

“We shouldn’t ask our military to pay our bills when we aren’t willing to impose a similar hardship on the rest of the population,” said Rep. Howard McKeon (R-CA), chairman of the House Armed Services Committee and a Republican from California, to the Washington Free Beacon. “We can’t keep asking those who have given so much to give that much more.”

Apparently we can. Administration officials acknowledge that the switch from the current Tricare coverage to the state-run exchanges is part of an effort to trim $1.8 billion from the Tricare medical system in the fiscal 2013 budget, and $12.9 billion by 2017. Yet these sums are paltry when compared to the overall effort by this administration to hammer military spending, which is now slated to be reduced by $487 billion over the next ten years without the cuts engendered by the Budget Control Act of 2011. The failure of the Congressional Super Committee to reach a deal "triggered" $1.2 trillion in automatic cuts that may raise that total to more than $1 trillion.

The new plan calls for a "tiered increase" in annual benefit payments based on one's yearly retirement pay. The Pentagon expects most of the savings to be accrued by targeting under-65 and Medicare-eligible military retirees. The initial increase in payments ranges from 30 percent to 78 percent in Tricare annual premiums for the first year. After that, five-year increases ranging from 94 percent to 345 percent will be imposed, more than tripling the current payment schedules. The Pentagon also will impose an annual fee for a military retiree program called Tricare for Life, which all military retirees must automatically join at age 65. Current enrollees pay the equivalent of a monthly Medicare premium. A new fee will be added on top of that premium.

There are three different tier schedules proposed for Tricare. Tier 1 retirees, with retired pay below $22,590, would see a 71 percent increase in enrollment fees over the next five years, from $520 to $893. Tier 2 retirees, drawing $22,590 to $45,178, would see their fees raised to $1,523 by 2017, nearly triple the current rate. Tier 3, retirees with annuities above $45,178, would pay $2048 by 2017, nearly four times the current fee. Individual coverage in Tiers 2 and 3 also would cost half of family coverage.

As for active duty personnel, they will be faced with increased co-payments for pharmaceuticals. Co-pays for 30 days of brand-name drugs in the retail network would rise from $12 to $34 in fiscal 2017, while co-pays for brand name at mail order, now $9 for a 90-day supply, would also reach $34 by 2017, thus eliminating any incentive to use generics instead of brand name pharmaceuticals. In addition, "third tier" drugs, as in those deemed too expensive to be on the military formulary, would no longer be available at retail outlets unless physicians deemed they were medically necessary.

The cuts reportedly have the unanimous support among "military chiefs," with Army Gen. Martin Dempsey, chairman of the Joint Chiefs, calling the current fee system, little changed since 1996, "an anachronism" the military no longer can afford. He characterized the fee increases as part of the "tough choices" that must be made to reduce military spending. “I want those of you who serve and who have served to know that we’ve heard your concerns, in particular your concern about the tiered enrollment fee structure for Tricare in retirement,” Dempsey said. “You have our commitment that we will continue to review our health care system to make it as responsive, as affordable, and as equitable as possible.”

An unnamed congressional aide was far less sanguine. “Would you stay with a car insurance company that raised your premiums by 345 percent in five years? Probably not,” the aide contended. “Would anybody accept their taxes being raised 345 percent in five years? Probably not." Another aide put the cuts in perspective as well. “We all recognize that we are in a time of austerity,” this aide said. “But defense has made up to this point 50 percent of deficit reduction cuts that we agreed to, but is only 20 percent of the budget.”

The aide further noted that military cuts are already eating into equipment budgets and troop levels, cuts the Obama administration admits reduce the military's capability to fight one major war while conducting a holding action in another conflict. “And now they are going to [the troops] again and asking them to pay more for their health care when you’ve held the civilian workforce at DoD and across the federal government virtually harmless in all of these cuts," the aide said. "And it just doesn’t seem fair.”

That's because it's not about fairness. It's about election-year politics. First, the increases aren't scheduled to kick in until after the 2012 election, more than likely to avoid riling up military voters, as critic of the plan contend. And second, the double-standard of leaving civilian workers’ benefits unchanged while raising the cost for members of the military is a transparent attempt to keep labor unions on the Democratic side of the voting ledger for the same election.

Military groups are opposing the changes, with a heightened animus aimed at the tier system, which some veteran groups characterized as “means-testing” for service personnel. Retired Navy Capt. Kathryn M. Beasley, of the Military Officers Association of America, whose Military Coalition comprises 32 military service and veterans groups with an estimated 5 million members, calls the proposed changes a "breach of faith." Richard L. DeNoyer, head of the 2-million-member Veterans of Foreign Wars (VFW), was even more direct. “There is no military personnel issue more sacrosanct than pay and benefits,” he contended. “Any proposal that negatively impacts any quality of life program must be defeated, and that’s why the VFW is asking everyone to join the fight and send a united voice to Congress.”

And then there is the obvious impact on recruitment. Opponents of the proposal note that the current benefit system has played an integral part in attracting and keeping high-quality soldiers in our all-volunteer military forces--forces that will be reduced from 570,000 soldiers to roughly 490,000 over the next decade.

Adding insult to injury, a new policy that took effect in February reduces something known as "imminent danger pay." Previously, soldiers in a "danger pay location" for any portion of a month got imminent danger pay for the entire month, which totaled $225. Now that pay is pro-rated at $7.50 per day. Thus, for example, a service member stationed 7 days of the month in Afghanistan will receive only $52.50. Exceptions will be made for troops “exposed to a hostile fire incident,” regardless of location. This change was part of the 2012 budget mandated by Congress.

Congress will also have to enact most of the proposed changes in Tricare, and hearings on the matter are scheduled for next month. Current law limits any increases in Tricare fees to cost of living increases in retirement pay.

There is little question that runaway budget deficits and a national debt of over $15 trillion require a serious re-thinking of America's spending priorities. There is also little question the military budget contains fat that can be trimmed. Yet there is an unseemliness surrounding the idea of balancing the budget on the backs of people who have served, and continue to serve, their country. Some have paid the ultimate price, leaving members of their families to cope without them. Others have endured life-changing injuries, both physical and mental. Virtually every one of them merit the honor and respect of a nation that, more often than not, takes their sacrifices for granted.

Most Americans are well aware of the so-called "sacred cows" and their well-connected supporters that inform the budget-making process, both in the military and every other area of government. They also know the political class tends to go where resistance to cuts is either weak or least impactful at the ballot box. In short, these particular cuts make it apparent that military personnel and their benefits are considered "low-hanging fruit."